Worldwide: The slick Greek city that's glad to stay ahead of the Games

By Harry de Quetteville in Thessaloniki

12:00AM GMT 27 Mar 2004

On a marbled piazza flanked on one side by a broad pedestrian boulevard and on the other by the sea, an accordionist plays a romantic melody for the people-watchers as they pass the time at an array of pavement cafes.

Done with the mochas, macchiatos and tall, sweet frappés that have long since driven the humble cappuccino from favour, the sharply dressed clientele wander off to peruse the designer shops that clutter the street.

But this is not Italy or Spain. This is the rebellious second city of Greece, which as its maliciously smirking residents will tell you, is not to play host to the Olympic Games this summer.

Thessaloniki will have to do without the blanket of dust that has coated the capital, they point out. Its 1,500,000 citizens will just have to live with being able to walk from one end of the street to the other without encountering major building works.

Here, the traditional envy and bitterness that a country's second city often directs at its capital has melted away - to be replaced by an insouciant smugness. Athens, they say, can keep the Olympics.

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Thessaloniki will get on with doing what it does best, which, it boasts, is to be the young, hip, hotbed of ideas that drives the rest of Greece.

"It's a town with a huge student population, almost 400,000," said Stathis Mavromatis, DJ at one of the host of trendy harbourside bars. "It's got that cool, relaxed, cutting edge feel to it that Athens just doesn't have.

"A lot of Greek artists and singers come from here, and then if they make it big, Athens steals them away. But that creativity starts here."

Much of it is fostered in a series of renovated old factories that once fed Thessaloniki's industrial heart and its still active port. In the centre of town, former olive-oil stores and a one-time brewery complex now house galleries and concert halls.

At Mylos, five minutes from the town centre, railway storehouses and disused carriages have been turned into a Covent Garden-style centre of cool. At one of the clubs there, Dmitris Hajilakos was minding the door at a concert led by a defrocked Orthodox priest.

"This is a more international, open-minded city than Athens," he said. "It's like Barcelona and Madrid. There, too, you have a port city that outshines the capital culturally and intellectually."

In the Balkans, better known for mass graves and ethnic strife than high fashion and haute cuisine, the fact that such comparisons are being made is a hugely positive sign. For some, Thessaloniki provides an image of hope, a vision of how Balkan cities could look if disputes are settled and prosperity spreads.

From the battlements of the White Tower, which stands on the city's promenade and symbolises Thessaloniki, the view is of a city on the up. But the tower is a reminder of the city's tumultuous past.

The foundations were built on Byzantine ruins and later occupied by the Ottomans until they were evicted by Greek forces just before the First World War. The city then became home to the Anglo-French Army of the Orient, which beat the Bulgarians in the hills above.

That mixed history has created a sense of difference from the rest of Greece. "We do not feel as Greek as the Greeks from the south," said Mr Hajilakos. "They have been independent Greeks for almost 200 years. We have been Greek for fewer than 100. We are Greeks, of course, but not 100 per cent."

Such internationalism is driving further development, from sushi bars to boutique hotels.

"A lot of buildings have been renovated in the last couple of years," said Thalia Kapagi, manager of a hotel that has just splashed out £3.3 million on fitting its neo-classical building with interiors by the French design guru Philippe Stark. "There's a different mentality here," she added. "A lot of people here hate Athens. We feel like we're in a different country."

Now the city may be poised to seize even more of the limelight away from Athens with the rise to power of Kostas Karamanlis, a son of Thessaloniki, in recent elections.

With him as prime minister, local people say, Thessaloniki may finally get the infrastructure - such as better roads and a metro system - it deserves.

But if they want to make that leap the people of Thessaloniki will have to put up with a layer of construction dust in their early evening coffees, just as those idiots do in Athens. And that, for most here, would never do.